Internal auditor’s compliance to code of ethics

Noor Furzanne Alias, Anuar Nawawi and Ahmad Saiful Azlin Puteh Salin

Journal of Financial Crime, 2019, vol. 26, issue 1, 179-194

Abstract: Purpose - The purpose of this study was to determine the professional competency levels acquired by internal auditors in detecting unethical behaviour, to evaluate the position of internal auditors on objectivity and integrity in dealing with unethical behaviour and to examine the extent of their awareness on ethical issues in government-linked companies (GLCs). Design/methodology/approach - Data were collected via questionnaires that were randomly distributed to the internal auditors of the selected GLS in Malaysia. These questionnaires were constructed from the Certified Internal Auditor (CIA) Examination Paper and The Institute of Internal Auditors (IIA) Competency Framework. Findings - This study found that internal auditors of the GLCs had a high level of competency in performing audit engagements and were able to detect unethical practices in the companies. The majority of the internal auditors also had a high level of objectivity and integrity when faced with unethical behaviour during audit engagements. Research limitations/implications - This study provided strong evidence that the internal auditors of Malaysian GLCs strongly complied with IIA Code of Ethics. Besides, they were also aware of the unethical behaviour which occurred within their organizations. However, this study is limited to the internal auditors in GLCs, while the questions of the survey instrument are restricted to the elements of integrity, objectivity and professional competencies of internal auditors. Practical implications - This study highlights the level of internal-auditor competency and adherence to the IIA’s International Standards for the Professional Practice of Internal Auditing (ISPPIA) and IIA’s Practice Guide to identify unethical behaviour within the Malaysian GLCs. Originality/value - This study is original as it focusses on GLCs which did not get much attention from previous researchers, particularly the GLCs that operate in a developing country such as Malaysia.

Keywords: Malaysia; Code of ethics; Ethics; Government-linked companies; Internal auditor; GLCs (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jfcpps:jfc-07-2017-0066

DOI: 10.1108/JFC-07-2017-0066

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